For many decades, the U.S. government has required financial institutions to take steps to help detect and prevent financial crimes including money laundering and terrorist financing. Federal law requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000, identify and assess risk of customers (Know Your Customer (KYC) rules) and report suspicious activity that might suggest money laundering, tax evasion, or other criminal activities. While Congress has repeatedly sought to enhance the anti-money laundering (AML) laws and penalties, federal regulators have played a critical role in updating and enforcing these regulations as they apply to cryptocurrency businesses. States, meanwhile, have also inserted themselves into this regulatory mix. The overlapping jurisdictions of these government regulators coupled with differing interpretations of AML compliance have triggered confusion and criticism from the cryptocurrency industry.
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